At a recent Digital Infrastructure Press Webinar hosted by Marsh, a global insurance broker and risk advisor, speakers discussed how the scale, concentration and complexity of modern data centre projects are reshaping risk for insurers and reinsurers, while also creating major opportunities for capital deployment.
The discussion featured Jeremy Goodman, Chief Client & Growth Officer for Guy Carpenter, the reinsurance business of Marsh, who outlined how the industry is adapting to the surge in large-scale digital infrastructure projects and the growing need for new insurance structures.
Goodman, reflecting on more than four decades in the insurance industry, highlighted how the role of data centres within the risk landscape has changed.
“The reinsurance market’s been underwriting data centres for decades,” Goodman said. “What has changed? It’s not the asset class, it’s the scale and the concentration.”
According to Goodman, the current development pipeline illustrates just how quickly the sector is expanding. “We’re currently tracking more than 1500 data centre projects globally, with over 900 of them still in planning, and more than 50 projects exceeding seven and a half billion dollars in capital,” he said, noting that many of these developments are clustered around major power hubs in the United States.
“That level of pipeline and capital intensity is unprecedented for what was historically viewed as a diversified commercial property segment,” he explained. “Digital infrastructure is shifting the diversified commercial property segment to more of a systemically concentrated infrastructure risk, and reinsurance needs to evolve from being transactional capacity to structural capital architecture.”
Goodman emphasised that while the nature of the asset class itself is not new, the magnitude of exposure has changed significantly.
At the same time, he pointed to the considerable amount of capital available to support the sector. “There’s an excess of $650 billion of dedicated global reinsurance capital, and that’s growing at roughly 10% year over year,” Goodman said. “About $125 billion of that capital now comes from alternative sources – pension funds, sovereign wealth funds, institutional investors – all seeking diversified asset classes.”
“So, the issue is not a shortage of capital,” he added. “The issue is how efficiently and intelligently we can deploy that capital and structure it.”
Ultimately, Goodman feels that “digital infrastructure represents one of the most significant capital deployment opportunities for the reinsurance market in a generation,” but he was quick to note that there are some shifts taking place.
One of the most significant structural changes involves the way large data centre campuses are being developed. “These large AI enabled campuses are clustering around constrained power nodes,” Goodman said. “These campuses share transmission infrastructure, substations, cooling systems, and often similar supply chains.”
This interconnected infrastructure means a single failure could affect multiple sites at once. “A single transform or a grid outage or extreme weather event can impact multiple campuses simultaneously,” he explained. “And given the size of these hyperscale campuses, the severity of loss escalates materially, both for property damage, delay in startup, and business interruption.”
As a result, reinsurers are increasingly assessing risks at an ecosystem level rather than looking at individual facilities. “Reinsurers are increasingly underwriting these ecosystems, not just the individual buildings,” Goodman said. “Data centres are no longer just large buildings, they’re concentrated power ecosystems.”
The market is beginning to respond with new insurance structures. Goodman pointed to “portfolio placements, sponsored risk pools and mutual structures that are supported by quota share and collateralised reinsurance” as examples of how capital can be deployed more efficiently across multiple projects.
Another development involves construction portfolio programmes. “We’re also seeing innovation in construction. Portfolio builders risk programmes can predefine eligibility criteria, engineering standards and risk controls across multiple projects,” he said. This approach allows developers to place several builds under a single framework rather than constructing separate insurance towers for each project. “When the projects scale, the insurance programme has to scale with them, structurally, not incrementally,” Goodman noted.
To conclude his opening remarks, Goodman said: “The market is not retreating from digital infrastructure, it’s innovating around it. And with more than 1500 projects globally, dozens exceeding seven and a half billion, digital infrastructure has become systemically important, and the strategic implications for the reinsurance sector are clear. It’s one of the largest capital deployment opportunities, but it requires a shift in mindset from transactional placement to structural capital architecture. From insuring buildings to underwriting interconnected infrastructure systems.
“The opportunity is significant. The capital exists. The challenge is our ability to structure intelligently, manage the aggregation rigorously and aligning deployment with multi-campus growth pipelines. And as digital infrastructure scales, risk capital must evolve from annually placement to strategic capital architecture.”
